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As wirehouses fight to keep brokers from moving to the independent channels, warring wirehouses are adding fuel to the fire. Morgan Stanley Smith Barney LLC and Merrill Lynch are going toe-to-toe by offering top reps a recruiting package of up to 330% of annual production. Sources have said that those are the highest levels ever. But be careful. Attorneys at SNSFE negotiate these deals and these deals are complicated and tied to a rep's ability to increase business. It's impossible to know how... Posted on November 20, 2009 at 01:14 pm by JEccleston@snsfe-law.com (James J. Eccleston)

Lawyers at SNSFE have commenced an investigation into the activities of John M. Leonard who has done business as High Net Worth Securities located in Illinois and Florida. Mr. Leonard formerly was associated with Workman Securities Corp. Specifically, SNSFE is investigating the propriety of investment recommendations for investors of Provident Royalties, Gulfstar, Mountain Energy, Naples Lubbock, and Advantage Office Suites, as well as any other limited partnership interest sold during the last... Posted on November 18, 2009 at 11:21 am by JEccleston@snsfe-law.com (James J. Eccleston)

SEC Chairman Mary Schapiro's recent speech to the securities industry, entitled, "The Road to Investor Confidence," certainly was not designed to win over friends from Wall Street. Prefacing her remarks by blaming Wall Street for the "recent crisis" (it didn't understand or simply ignored the risks) and by blaming the SEC (for being asleep at the wheel), she described how the SEC is going about restoring investor confidence and protection. Let's review the more important initiatives and... Posted on November 12, 2009 at 09:44 am by JEccleston@snsfe-law.com (James J. Eccleston)

A federal court recently certified a class action against Charles Schwab & Company, Inc. brought on behalf of investors in the Schwab YieldPlus Fund. The certification means that the lawsuit can proceed as a class action; no settlement has been reached. Most importantly for YieldPlus investors with significant losses, the deadline to be excluded from this class action is December 28, 2009. Absent a timely and properly filed request for exclusion, YieldPlus investors who happen to be class... Posted on November 17, 2009 at 02:14 pm by Page Perry LLC

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following: &#xe2€&#xa2 The Dow Jones Industrial Average opened the week at 10,023 and, on Monday, the market soared 204 points. &#xe2€&#xa2 On Tuesday, the Dow Jones Industrial Average rose 20 points. &#xe2€&#xa2 On Wednesday, the Dow Jones Industrial... Posted on November 17, 2009 at 06:27 am by Page Perry LLC

Private investments (also known as private placements or Reg D offerings) have been the subject of a growing number of fraud charges by the U.S. Securities and Exchange Commission and some states. Such deals, including oil and gas ventures and real estate partnerships, have historically been capitalized by sales to individual investors through independent broker-dealers. Promoters of these investments depend upon this channel to raise money and the broker dealers reap rich commissions on the... Posted on November 13, 2009 at 11:26 am by Page Perry LLC

RIA's and state regulators are optimistic following a report that Barney Frank, Chair of the House Financial Services Committee, intends to oppose an amendment to legislation that would expand FINRA's regulatory authority to cover certain registered investment advisors, reports Investment News. The amendment would give FINRA authority to regulate the investment advisory business of firms that are dually registered - meaning that they are both registered investment advisors and broker-dealers.... Posted on November 19, 2009 at 06:27 am by Joel Beck

Oftentimes large firm brokers receive forgivable loans to join a firm, or retention bonuses for staying, that require the broker to stay at the firm a number of years, or be forced to return the funds if he or she leaves. Typically, when a broker leaves a firm and owes money pursuant to one of these notes, the firm must file an arbitration claim against the broker before FINRA Dispute Resolution. The arbitration process takes time, although FINRA recently changed its procedures for note cases... Posted on October 22, 2009 at 06:37 am by Joel Beck

Thanks to my friend and fellow securities lawyer Mark Astarita in New York for highlighting a recent SEC against against a former broker and investment advisor. And, if you're not following Mark's blog, you should. He's a pioneer in this area, and authored the first blog I recall seeing on regulatory matters. The SEC announced earlier this week that it filed civil charges against former broker and investment adviser Frank Bluestein in connection with the Edward May ponzi scheme. According to... Posted on October 2, 2009 at 03:00 am by Joel Beck

If you own one of these funds you probably know that Morgan Keegan's High Income and Intermediate Bond Funds crashed and burned in 2007, losing over 50% of their value in a year. The problem began when the value of the funds' assets (which included lots of securities tied to toxic subprime mortgages) collapsed. At that point hordes of understandably anxious fund owners said "enough" and began redeeming their shares , forcing the funds to sell assets for cash. The rush to the exits hardly... Posted on April 18, 2008 at 08:28 am by Brian N. Smiley

So how bad is it? Take a look at the "Money and Investing" section of the February 8, 2008 Wall Street Journal. The story "Prosecutors Widen Probes into Subprimes" reveals that criminal or regulatory investigations concerning fraud in the subprime market are underway by: (1) U.S. Attorneys Office for the Eastern District of New York (Brooklyn) - investigating Bear Stearns and UBS; (2) U.S. Attorneys Office for the Southern District of New York (Manhattan) - newly initiated investigation... Posted on February 19, 2008 at 02:28 pm by Brian N. Smiley

"They" are the giants of Wall Street. "They" are the folks who pumped billions of dollars of bonds backed by subprime mortgage obligations into the hands of unsuspecting investors like you. These loans are called subprime because they were made to people who were likely to be unable to repay them. Subprime loans were made to borrowers who had low credit scores, a history of late payments, or even recent bankruptcies. These subprime loans were then bundled and "repackaged" by financial... Posted on February 12, 2008 at 07:31 am by Brian N. Smiley

Earlier this week, Applied Materials (AMAT) announced that it was acquiring Semitool (SMTL) in a $364 million all-cash deal. As we've footnoted before, Semitool had an interesting side-deal with CEO Ray Thompson that had the company leasing several planes and an aircraft hangar from separate companies owned or controlled by Thompson. Given Semitool's size, the arrangement, which in 2006 had the company paying Thompson $3.2 million, seemed a tad excessive. Fast forward to yesterday, and this SC... Posted on November 20, 2009 at 08:07 am by Michelle Leder

Yesterday, there was a hearing in New York over the Lehman bankruptcy where Lehman CEO Bryan Marsal, who we've written about several times over the past year (see here and here). The big headline out of yesterday's hearing was Marsal's statement that claims against Lehman could top $1 trillion since the number of claims already top 64,000 and are valued at $824 billion. The other big headline is that a reorganization plan would be in place by the end of March 2010. As part of yesterday's... Posted on November 19, 2009 at 08:01 am by Michelle Leder

When we posted on Nov. 12 about the flurry of margin calls at Boston Scientific Corp. (BSX), there was no way to know that the pace of involuntary stock sales would continue. As a historical recap: Michelle noted in her post last week that company co-founders Peter Nicholas and John Abele sold off over 30 million shares of BSX stock last fall; they sold millions more shares of the stock earlier this year. Fast forward to this month&#xe2€&#xa6. Between Nov. 5 and the evening of Nov. 12, Nicholas sold... Posted on November 18, 2009 at 08:56 am by Sonya Hubbard

Pop quiz: the law of which jurisdiction should govern a coverage dispute arising under D&O insurance policies issued by U.S-domiciled insurers to an NYSE company incorporated in Delaware with its headquarters in Oregon? If you find the answer "British Columbia" as surprising as I do, read on. The court decision discussed below could have important implications for the typical U.S. D&O policy, with its extension of "worldwide coverage," particularly as both commerce and litigation become... Posted on November 20, 2009 at 01:56 am

Beginning with the corporate scandals earlier in this decade and continuing with the more recent financial meltdown and Ponzi scheme revelations, these has been a widespread push toward corporate governance reform. In some European countries, these developments have been accompanied by the implementation of mechanisms to provide some form of relief to the victims of corporate misconduct. These legal trends have in turn had a significant impact on the European D&O insurance marketplace, as... Posted on November 19, 2009 at 01:26 am

One interesting thing about the most recently filed securities class action lawsuits is what they have in common - that is, that while the companies sued are drawn from a surprising diversity of industries, none of them are in the financial services sector. The absence of new securities suits against financially related companies is quite a contrast to the lawsuits that were being filed a year ago, and for that matter that were being filed in the first few months of 2009. There is an... Posted on November 18, 2009 at 01:07 am

Our New "Model" Proxy Walkaway Disclosure Since every company will now need to address walkaway numbers in this year's proxy statements, we have devoted the "Fall '09 issue of Proxy Disclosure Updates" to analyzing how to draft this type of disclosure. We even provide a model walkaway disclosure in this critical issue. You will receive this issue, which is posted on CompensationDisclosure.com, by taking advantage of a no-risk trial to Lynn, Borges & Romanek's "Executive Compensation... Posted on November 20, 2009 at 04:05 am by Broc Romanek

Some Thoughts on Using Twitter: My Experiences So Far Here are some thoughts about Twitter that I posted a while back on "The Mentor Blog": Recently, I blogged about how you need to learn about Twitter since more and more executives are using it and you need to be able to recognize the corporate & securities law issues that arise, just like any other medium. I also noted that I've been regularly Tweeting since the beginning of the year. With 10-months-plus experience under my belt, I can... Posted on November 19, 2009 at 03:59 am by Broc Romanek

Renewal Time for 2010 Knowing that the economy continues to wreak havoc with your budget, we have decided to freeze the prices for our publications for next year. As all our memberships expire at the end of the year, please take a moment to renew today at our "Renewal Center" for: - TheCorporateCounsel.net - The Corporate Counsel print newsletter - The Corporate Executive print newsletter - Lynn, Borges & Romanek's "Executive Compensation Annual Service" on CompensationDisclosure.com (this... Posted on November 18, 2009 at 04:14 am by Broc Romanek

I posed a question in an earlier post as to the liability of computer hackers for insider trading when they break into a company's computer systems, obtain material non-public information, and then trade on that information. There are a number of problems with that legal theory, as there is no fiduciary relationship between the hacker and the company. While the courts have eviscerated the legal underpinnings of 10(b)5 over the years, there is no support for the concept that a thief, a complete... Posted on November 19, 2009 at 03:03 am by Mark J. Astarita, Esq.

According to the NYT, hackers are increasingly targeting law firms and public relations companies with a sophisticated e-mail scheme that breaks into their computer networks to steal sensitive data, often linked to large corporate clients doing business overseas. This might be an interesting test of our insider trading laws. Hacker steals material, non-public information from law firm, trades. Is he liable for insidert trading violations? More>>> Technorati Tags: insider trading Posted on November 18, 2009 at 01:28 am by Mark J. Astarita, Esq.

It's tough working for the government, with politicans making business decisions. Unhappy over constraints imposed by U.S. government overseers, AIG Chief Executive Robert Benmosche told the company's board last week that he is considering stepping down, according to the Wall Street Journal. Benmosche is said to be unhappy over a recent compensation review by Kenneth Feinberg, the Treasury bailout program's special master for compensation. More>>> Posted on November 11, 2009 at 02:32 am by Mark J. Astarita, Esq.

Huiwen Liu is part owner of a natural food store in the Vancouver suburbs. The business has only a few employees and is sandwiched between a sex shop and a clinic for drug addicts. According to Securities and Exchange Commission filings, Liu also is sole shareholder of an offshore investment company that got 10.1 percent of China Fire & Security Group Inc. (Nasdaq: CFSG) when it went public through a reverse merger in 2006. That offshore company, Worldtime Investment Advisors Ltd., notified... Posted on March 10, 2008 at 06:52 pm

Xethanol Corp. is trying to unload a former pharmaceutical plant in Georgia that had been the centerpiece of its plan to turn wood chips, paper pulp and other organic waste into ethanol. The Augusta Chronicle reported last week that Xethanol (AMEX: XNL) told workers who have been tending the property that it was for sale. When Xethanol and a joint venture partner bought the idled plant in August 2006, they said it would be retrofitted to produce 50 million gallons of ethanol a year, and would... Posted on January 14, 2008 at 03:39 pm

Orthopedic Development Corp.'s president said in an affidavit in a federal court case in North Carolina that he had never engaged in business in that state, had not gone there to recruit a sales executive or "otherwise traveled there.'' But Sharesleuth.com, which posted an investigative report on ODC on June 8, has copies of e-mails that appear to disprove those assertions. James Doulgeris, who heads ODC, submitted the affidavit last week in connection with a motion to dismiss the case in North... Posted on June 19, 2007 at 05:23 pm

Institutional Investors Defend an Independent PCAOB as Integral to Reform of Securities Markets In a Supreme Court brief, a consortium of major institutional investors view the PCAOB's authority to establish auditing, attestation, quality control, and independence standards, subject to SEC approval, as central to the oversight structure around which a reformed investment market is being built. This is in contrast to the patchwork, voluntary system the Board replaced. Essentially, the brief... Posted on November 22, 2009 at 12:05 pm by James Hamilton

Center for Audit Quality Defends PCAOB's Record in Urging Supreme Court to Leave Board Intact With oral argument looming in a case challenging the constitutionality of the PCAOB, the Center for Audit Quality has strongly defended the Board's achievements in accomplishing the goals of the Sarbanes-Oxley Act. In an amicus brief filed with the Supreme Court, CAQ said that the Board has improved audit quality and enhanced investor protection by conducting thorough inspections, focusing on... Posted on November 22, 2009 at 08:29 am by James Hamilton

New Mexico Proposes Rule Revisions to Align with New 2010 Securities Act Rule amendments were proposed by the New Mexico Securities Division to align the rules with adoption of the new New Mexico Uniform Securities Act that takes effect January 1, 2010. The rule changes are likewise anticipated to become effective on January 1. Many of the proposed changes are nonsubstantive, updating rule references to reflect the correct section and subsection numbers of the new Act, lower-casing certain... Posted on November 20, 2009 at 08:45 am by Jay Fishman

According to its website, the SEC has "charged four individuals and two companies involved in perpetrating a $30 million Ponzi scheme in which they persuaded more than 300 investors nationwide to participate in purported environmentally-friendly investment opportunities." At last, the politically correct Ponzi-scheme. Returns over 100% to good to be true? According to the SEC press release, investors were allegedly promised abnormally high returns "ranging from 17 percent to hundreds of percent... Posted on November 18, 2009 at 11:28 am

In case you didn't know, we are in a recession. Of course, whether we are at the beginning, middle or end depends on where you get your news, your political bent, and how well your investments have weathered the storm. One thing is certain though - desperate times call for desperate measures, and this can lead to unusual albeit creative ideas...enter securitization of life settlements. A life settlement is a fairly simple concept. You own an insurance policy and, prior to your death, you sell... Posted on November 13, 2009 at 10:05 am

The numerous national and even local Ponzi-schemes that have come to light in recent months share a common thread - victims are always left wondering how they could have better protected themselves. In the wake of a turbulent global economy with no immediate end in sight, it is almost certain more schemes will be revealed in the coming months, begging the question "am I Ponzi-scheme victim?" Unfortunately, there is no sure fire answer to this question. However, a comparison of recent and past... Posted on August 19, 2009 at 09:46 am

It looks like there is a small problem with the impending amendments to the Federal Rules of Civil Procedure. The drafters seem to have overlooked an important point: exactly how will the Rule changes apply to deadlines which have started running before December 1st, the date on which the changes become effective? If you aren't aware of the amendments about to take effect, the way in which you count the days to respond to a federal court filing will change on December 1, 2009. Time periods will... Posted on November 19, 2009 at 07:29 am

It might seem self-evident that the Business Judgment Rule applies to decisions made by the managers of a limited liability company, but if you were looking for a North Carolina case to cite on that point before last week, you wouldn't have found one. But now, we have Mooring Capital Fund, LLC v. Comstock North Carolina, LLC, a November 13, 2009 decision from the North Carolina Business Court. The case addresses not only the business judgment rule, but also two other significant aspects of... Posted on November 16, 2009 at 03:40 am

It is "an important and longstanding characteristic of corporate law" that a shareholder is not liable for corporate obligations. That principle led yesterday to the Business Court's grant of summary judgment for a parent corporation, its subsidiary's sole shareholder, in Griffin Management Corp. v. Carolina Power and Light Co., Inc. Plaintiff had a meter reading contract with CP&L. CP&L terminated the Plaintiff, who then sued not only CP&L, but also its parent company and sole... Posted on November 13, 2009 at 06:04 am

The trials and tribulations of former plaintiff's lawyer Steven Eugene ("Gene" a/k/a "Geno") Cauley have received a fair amount of ink over the last year, but there is a new twist. Readers may recall that Cauley was one of the lead counsel in the BISYS securities litigation that settled in 2006 for $65.8 million. Cauley was the sole signatory of the escrow fund in the BISYS litigation, and revealed in April that he was unable to produce the $9.3 million in remaining settlement funds from the... Posted on November 16, 2009 at 11:20 am by Adam Savett

It has been just one week since we last updated the options backdating numbers. With the recently noticed (hey we're not perfect) settlement last month of litigation involving alleged options backdating at Sonic Solutions, Inc., (NASDAQ: SNIC) for $5 million, it's time to crunch the numbers once more. Of the 39 options backdating cases that have been filed as securities class actions, 30 have now reached a resolution. Of the resolved cases, 9 of those cases have been dismissed and 21 have... Posted on November 12, 2009 at 05:32 am by Adam Savett

Here is the latest round of updates to our securities litigation conferences, webcasts, and other events list. For the full list, please go here. As always, readers are encouraged to send information on securities litigation related events to us via the "Contact Us" link on the upper left hand side of this blog. 15th Annual Advanced Forum on D&O Liability November 30 - December 1, 2009 The Carlton - New York, New York Highlights: &#xe2€&#xa2 Newest trends and developments arising from the wave of... Posted on November 11, 2009 at 03:41 pm by Adam Savett

Sun Microsystems is trying something different -- the company just released its quarterly earnings via 8-K, and simultaneously on Sun's website (and available by RSS feed), and only released the information to the private wire services 10 minutes later. There isn't anything wrong with this from a Regulation FD (fair disclosure) standpoint -- the SEC counts either release through the wire services or filing of an 8-K as "public disclosure" under Regulation FD. As noted in this post, Sun has been... Posted on August 2, 2007 at 03:19 pm by ALEXANDER SIMPSON

It's been a little while, but Mike Dillon, Sun's General Counsel, wrote a blog post (The Way of the Mastodon) that has caused somewhat of a stir in the legal community. Basically, Mike Dillon argues that, in the past, when he had a new legal matter, he had to turn to his large firm(s) and ask them if they could do the work, or at least refer him to somebody who could. Now, with listserves and the ease of email and forums, etc., he can easily email 15 GCs and ask them what they think. It's a... Posted on August 2, 2007 at 03:17 pm by ALEXANDER SIMPSON

David Katz and Laura McIntosh of Wachtell have put out a memo noting a trend among public companies towards withholding earnings guidance, or limiting it to annual guidance. There is a little bit of a "first mover" stigma problem here -- who wants to be the first one? The memo is more of a discussion of the various issues than an argument for one particular viewpoint. Dominic Jones at IR Web Report, as usual, has a good discussion of this trend, and a link to the U.S. Chamber of... Posted on August 2, 2007 at 02:38 pm by ALEXANDER SIMPSON

/**/ To the Securities and Exchange Commission: On November 18, 2009, Overstock.com (NASDAQ: OSTK) held conference call where CEO Patrick M. Byrne, company President Jonathan E. Johnson, and CFO Steve Chesnut sought to justify the company's improper treatment of accounting certain errors under investigation by the SEC, the company's firing of Grant Thornton as its auditors, and the company's filing of an "unreviewed" Q3 2009 10-Q with the SEC. Patrick Byrne did not permit me to ask crucial... Posted on November 21, 2009 at 04:14 pm by Sam E. Antar

This evening Overstock.com (NASDAQ: OSTK) held a conference call to discuss certain financial reporting violations covered extensively in this blog, their firing of Grant Thornton as their auditors who agreed with me on the accounting issues now being investigated by the SEC, and their unprecedented filing on an "unreviewed" Q3 2009 10-Q. I sent emails to Overstock.com CEO Patrick Byrne (pictured to the right) and that were cc'd to other persons at the company requesting to ask questions during... Posted on November 18, 2009 at 10:58 am by Sam E. Antar

Updated In a real dumb move, Overstock.com (NASDAQ: OSTK), led by CEO Patrick Byrne, dismissed Grant Thornton as the company's auditors and filed an unreviewed Q3 2009 10-Q because of material disagreements over certain accounting issues with its now fired auditors. Those material disagreements relate to reports in my blog exposing Overstock.com's establishment of an improper "cookie jar" reserve to materially inflate its future financial performance in violation of Generally Accepted... Posted on November 16, 2009 at 05:01 pm by Sam E. Antar

The Canadian Securities Administrators (CSA) today published a staff notice regarding its review of executive compensation disclosure subsequent to the adoption of the revised Form 51-102F6. The revised Form applies to financial years ending on or after December 31, 2008 and the notice follows a series of targeted reviews to assess compliance with the required disclosure obligations undertaken by staff of the BCSC, ASC, OSC and AMF. While 62 of the 70 companies reviewed were considered to have... Posted on November 20, 2009 at 02:48 pm

The Investment Industry Regulatory Organization of Canada (IIROC) is hosting a compliance-focused conference on December 1 in Toronto. The conference, targeted to employees of compliance, legal and related departments of IIROC member firms, will be considering issues respecting best execution and trade through, the client relationship model and current legal trends. Online registration is available here. Posted on November 20, 2009 at 02:10 pm

/**/ On November 20, 2009, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-330 Guidance Regarding the Application of Forward-Looking Information Requirements under NI 51-102 (the Staff Notice). The purpose of the Staff Notice is to outline results of the CSA's continuous disclosure reviews conducted on compliance with the forward-looking information (FLI) requirements in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). These FLI requirements... Posted on November 20, 2009 at 01:52 pm

A significant part of the Firm's Veterans Benefit Program is raising awareness about the many fantastic organizations that support our nation's honorable veterans. One such organization is Operation Homefront, which provides assistance for our troops, their families and for wounded warriors when they return home. These services include providing emergency aid (food, baby care items, etc.), financial assistance and even helping families move their households when a service member is deployed.... Posted on November 20, 2009 at 09:42 am by Ryan Smith

The inaugural issue of L'AWful Prose hit e-mailboxes around the country on November 15, 2009. It offers news and notes gleaned from my law practice - The Law Office of Ryan P. Smith, PLC - and life in general. In this newsletter, I share my take on issues in securities law and veterans benefits law. I also offer you assorted notes and observations from the lighter side of life. You are invited to read, enjoy and, if the mood strikes you, comment on this material or pass it along to interested... Posted on November 18, 2009 at 08:32 am by Ryan Smith

The present financial crisis has generated a tremendous amount of coverage and I am sure that much more is to come. And rightfully so. One of the more recent offerings is Knight Kiplinger's column Lessons From the Crisis, which is available in the December issue of Kiplinger's Personal Finance. Kiplinger, who is the magazine's Editor in Chief, offers a thoughtful and concise "lessons learned" for investors and regulators alike. Among the more notable lessons are: "Complexity breeds chaos" (or... Posted on November 14, 2009 at 08:00 am by Ryan Smith

CFTC Regulation 4.22 Overview CFTC registered commodity pool operators have a number of regulatory and compliance issues to be aware of. In addition to a having a compliance program which addresses the business and regulatory issues applicable to the manager, one of the more important compliance requirements is found in CFTC Regulation 4.22 which provides the reporting framework with respect to (i) periodic reports to investors and (ii) annual reports to investors and the NFA. While many hedge... Posted on November 20, 2009 at 01:38 am by Hedge Fund Lawyer

CFTC Regulation 4.22 Amended Earlier this year the Commodities Futures Trading Commission ("CFTC") proposed amendments to certain Part 4 Regulations. Last week, after a lengthy comment and revision period, the CFTC published the amendments in the Federal Register. The effective date of the amendments is December 9, 2009 and will apply to commodity pool annual reports for fiscal years ending December 31, 2009 and later. [HFLB note: as we have discussed earlier, spot forex hedge fund managers... Posted on November 19, 2009 at 04:13 pm by Hedge Fund Lawyer

CBO Calculates Cost of House Hedge Fund Bill This past week the Congressional Budge Office ("CBO") released a cost estimate of H.R. 3818, the Private Fund Investment Advisers Registration Act of 2009. In a number of private conversations I have had about hedge fund registration over the last 9-12 months one of the issues that was continually raised was appropriate funding for the SEC. As we have seen recently (most notably from the Inspector General's Madoff report), the SEC's budget is not... Posted on November 17, 2009 at 12:06 pm by Hedge Fund Lawyer

By Executive Order dated November 17, 2009, President Obama established a new interagency Financial Fraud Enforcement Task Force ("Task Force"). The Task Force, led by the Department of Justice and chaired by Attorney General Eric Holder, will work with state and local law enforcement agencies to strengthen efforts to "investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery efforts, recover the proceeds of such... Posted on November 18, 2009 at 07:59 am by Richard D. Worth

The anticipated escalation of securities and investment fraud cases prompting criminal charges got off to an unexpected start with the acquittal of two Bear Stearns hedge fund managers last week. Regardless, financial industry members and their attorneys should continue to defend civil investigations and suits and administrative actions with an eye on the possibility of an indictment. Administrative enforcement personnel are in constant referral contact with criminal enforcement agencies such... Posted on November 15, 2009 at 12:50 pm by David Cosgrove

On November 3, 2009, the Financial Planning Coalition sent a letter to members of the House Financial Services Committee expressing the Coalition's concern regarding an amendment to the Investor Protection Act of 2009 ("IPA"), which was passed by the Committee on October 25, 2009. The amendment would extend FINRA's authority to cover investment advisors who are associated with broker-dealers already under FINRA's authority. The Coalition, made up of the Certified Financial Planner Board of... Posted on November 5, 2009 at 12:41 am by Kurt J. Schafers

Does playing with the numbers ever really pay off? The Securities & Exchange Commission (SEC) is working hard to make sure we all know that it doesn't. Yesterday, the SEC announced that it has filed its first enforcement action using Regulation G against SafeNet, Inc. and several of its former officers and accountants. The SEC filed its complaint in the United States District Court for the District of Columbia and it includes a laundry list of allegations and fines, which the parties have... Posted on November 13, 2009 at 06:34 am by Gusrae, Kaplan, Bruno & Nusbaum

Last month, the Securities and Exchange Commission (SEC) brought securities fraud charges against a New York securities broker who allegedly created and disseminated "fake press releases to manipulate the stock prices of multiple publicly traded companies." But for this publicity hound, the alleged campaign failed in short order. The accused broker, Mr. Lambros Ballas, is a registered representative with the firm Global Arena Capital Corporation. His alleged scheme was simple, fraudulent and... Posted on November 6, 2009 at 07:05 am by Gusrae, Kaplan, Bruno & Nusbaum

The Financial Industry Regulatory Authority (FINRA) is teaching brokerage firms a great deal these days and imposing fines in the process. This time, Scottrade is in the hot seat and will pay a $600,000 fine for its alleged failure to "establish and implement an adequate anti-money laundering (AML) program to detect and trigger reporting of suspicious transactions, as required by the Bank Secrecy Act and FINRA rules." FINRA instructs by Scottrade's example that the trading environment for each... Posted on October 29, 2009 at 08:29 am by Gusrae, Kaplan, Bruno & Nusbaum

Medical Capital Receiver Paints Grim Financial Picture The U. S. Securities and Exchange Commission Receiver overseeing the Medical Capital investment fraud filed an "accounting" as of September 5, 2009. The goal of the report is to provide the status of receivership estate and its assets. Unfortunately, the news in the report paints a grim picture. Posted on October 19, 2009 at 03:30 pm

The SEC Sues Regions Bank for Violations of Federal Securities Laws The United States Securities and Exchange Commission ("SEC") has sued Regions Bank, successor to Union Planters Bank, for its role as trustee of an investment plan through which unregistered broker-dealers, U.S. Pension Trust Corp. ("US Pension Trust") and U.S. College Trust Corp. ("US College Trust") (collectively, "USPT") allegedly defrauded approximately 14,000 investors. According to the SEC's allegations, USPT charged... Posted on September 22, 2009 at 09:13 am

The SEC Sues Regions Bank for Violations of Federal Securities Laws The United States Securities and Exchange Commission ("SEC") has sued Regions Bank, successor to Union Planters Bank, for its role as trustee of an investment plan through which unregistered broker-dealers, U.S. Pension Trust Corp. ("US Pension Trust") and U.S. College Trust Corp. ("US College Trust") (collectively, "USPT") allegedly defrauded approximately 14,000 investors. According to the SEC's allegations, USPT charged... Posted on September 22, 2009 at 09:13 am

Blum & Silver, LL and its co-counsel have obtained one of the single largest arbitration awards against an individual financial advisor. The award was against a former Boca Raton stockbroker who was ordered to pay a $7 million arbitration award - including $4 million in punitive damages - by a FINRA arbitration board. The FINRA arbitrators found Gary J. Gross made false representations and didn't tell customers about the risks and suitability of securities he bought for them while working... Posted on August 30, 2009 at 08:05 pm by Blum & Silver, LLP

Investment News recently reported that multiple claims have been filed against the brokerage firms which sold interest in Medical Capital and its related business. The allegations include claims of negligence and breach of fiduciary duty, The Medical Capital investment was a private placement. Private placements are generally considered to be risky and cannot easily be sold . However, many investors are alleging that the firms sold these interests as safe conservative investments appropriate... Posted on August 30, 2009 at 07:49 pm by Blum & Silver, LLP

On July 16, 2009, the Securities and Exchange Commission filed an emergency court action to halt a $77 million offering fraud perpetrated by defendants Medical Capital Holdings, Inc. ("Medical Capital"), Medical Capital Corporation ("MCC") and others. The SEC's complaint alleges that the defendants defrauded investors by misappropriating about $18.5 million of investor funds and by misrepresenting to investors that no prior offerings had defaulted on or been late in making payments to investors... Posted on August 25, 2009 at 08:46 pm by Blum & Silver, LLP

In Re Schmitz, No. 07-0581, 2009 WL 1427184 (Tex.), 52 Tex. Sup. Ct. J. 772 (Tex. May, 22, 2009) [Download PDF] Somers v. Crane, No. 01-07-00754-CV, 2009 WL 793751 (Tex. App.--Houston [1st Dist.] March 26, 2009). Both of these cases involve challenges by shareholders of Texas corporations to proposed cash-out mergers. In Schmitz, the board of directors of Lancer Corp. accepted a buyout offer from Hoshizaki America, Inc. for $22 per share. About a month before the merger was to be submitted to... Posted on May 30, 2009 at 10:22 am

Lund v. Krass Snow & Schmutter, P.C., --- N.Y.S.2d ----, 2009 N.Y. Slip Op. 03996, 2009 WL 1406312 (N.Y.A.D. 1 Dept., May 21, 2009) [Download copy--pdf] An intermediate appellate court in New York has affirmed a judgment in favor of the plaintiff in a shareholder oppression case. The lawsuit was among attorneys who were shareholders in a law firm professional corporation. The trial court found that the defendants were guilty of oppressive actions based primarily upon "the uncompensated... Posted on May 29, 2009 at 01:56 pm

Rusyniak v. Gensini, Slip Copy, No. 5:07-CV-0279 (GTS/RFT), 2009 WL 1269911 (N.D.N.Y. May 05, 2009)-In this recent case, the United States District Court for the Northern District of New York issued an unpublished opinion denying a host of motions to dismiss and granting leave to the plaintiffs to file a Second Amended Complaint. The case involves a complicated and involved set of allegations of misconduct by the controlling shareholders in a closely-held corporation. Among many other causes of... Posted on May 18, 2009 at 06:52 am

I will admit, I have a small firm. in fact, you can't get much smaller than a law firm of one lawyer. I like to think that I am conscious of the costs of running a business and hiring a lawyer. If a document can be scanned an emailed, that's the way I send it. Unless someone requires me to do so, I will not fax something and then send it by overnight delivery service. Today I received a discovery request from a large firm in Chicago. It was something that they previously had faxed to me. So... Posted on September 2, 2008 at 12:54 pm